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Retail

GameStop sales down 10%, profits halved

GameStop sales down 10%, profits halved

Thu 22 Aug 2013 2:43pm GMT / 10:43am EDT / 7:43am PDT
Retail

Retailer says year playing out "as expected," console transition blamed for slumping hardware, pre-owned revenues

GameStop today reported financial results for the second quarter of its fiscal year, and the results were no better than it managed in the first quarter.

For the three months ended August 3, GameStop posted sales of $1.38 billion, down nearly 11 percent year-over-year. The bottom line also took a hit, as GameStop reported net income of $10.5 million, half the $21 million it managed to earn in the same period last year.

"Through two quarters, the year has played out as expected," CEO Paul Raines said in a statement. "During this console transition period, our financial results have been supported by the continued growth of our emerging businesses."

Those emerging businesses managed to post gains in the quarter, as the company's mobile sales were up 121 percent to $55.1 million, while its digital offerings were up nearly 18 percent to $158 million. However, the company's traditional business divisions were down across the board. New software sales were down more than 9 percent to $429.8 million, while its second-hand business declined 6 percent to $528.7 million. As in the previous quarter, new hardware took the biggest hit, down more than 19 percent to $147.8 million "as consumers continue to wait for the launch of the new consoles later this year."

Despite the numbers, GameStop expects its slump to be reversed in the current quarter (which will see the launch of the highly anticipated Grand Theft Auto V, among others), with comparable store sales up 11-15 percent. The company cited healthy numbers for new console preorders and "higher-than-expected launch quantity allocation" in increasing its full-year earnings per share forecast from a $2.90 to $3.15 range up to $3 to $3.20.

4 Comments

Paul Johnson
Managing Director / Lead code monkey

834 1,086 1.3
I know very little about the retail business sector. But surely if you lose half your profits from a 10% drop in sales, the margins just aren't working?

Footfall must be pretty crap as I know the markups involved and the shops are all making similar/more income per unit than anyone else in the foodchain.

Posted:A year ago

#1

Aaron Johnson

22 34 1.5
Likely, people are buying with trade-in credit rather than straight-up cash. This would draw your margin ratio down.

Posted:A year ago

#2
Brick and mortar and all the overhead cost associated with it ...tough business environment. To be honest Im surprised they are even making a profit.

Posted:A year ago

#3

Paul Johnson
Managing Director / Lead code monkey

834 1,086 1.3
As am I tbh, most of the game shops in my admittedly pretty rural area have already gone. I guess I can see why now!

Posted:A year ago

#4

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